One of the curious things about the marketing profession is that we like to put things into neat, separate boxes. For example, the marketing activities that make up the total marketing mix investment are usually classified as being either “strategic” or “tactical”. The justification for doing this seems simple enough: strategic activities are those that are designed to create long-term brand value – often referred to as “Brand Equity” – whilst tactical activities are designed to stimulate immediate sales revenue responses in order to meet the requirements of the business’ current annual plan.
In reality, strategic and tactical activities are not distinctly separate activities designed to deliver different outcomes. They combine together and they both determine the future value of your brand. If we only focus on the short-term, then we risk potential damage to the long-term value of the brand. Equally, if we only fix our sights on the long-term, then there is the danger that we end up missing our short-term volume, revenue and profit imperatives – and never reach the long term!
Effective Net Preference (ENP) is the only reliable tracking model that simultaneously measures your performance on the factors that influence both the short-term and the long-term – tactical and strategic – that determine the overall strength of your brand relative to your competitors.
It can do this because it brings together all the factors that influence our attitudes and preferences for one brand over another into five key drivers:
So what are these 5 key drivers?
Relevancy: Do I need this? Is this a type of product or service that is relevant to my needs? Moreover, does it have the right features to meet the task?
Identification: Does it have an image I’m comfortable with? Is this a brand or company I would be proud to be associated with?
Accessibility: What’s the time, effort, and cost involved in using this brand / service? Could I readily buy this brand of product or service if I wanted to?
Value: Is the benefit I’ll get worth the effort/cost? Is this brand good value for money?
Risk: What are the chances I’ll be disappointed? If I bought this brand would I be completely satisfied?
The elements that make up each of these five drivers consist of both tactical and strategic components and this makes our ENP model the bridge between short term sales activation and long term brand building.
Why is ENP important and useful?
The ENP model enables companies to determine the optimal balance of spending between short-term and long-term investment and delivers a means of measuring, with hard data, that “the balance is being balanced correctly”.
It is a measure of a brand’s strength – the degree of loyalty a brand enjoys with its consumers – and because you can measure it for your own and competing brands, it helps you determine your brand strength relative to your competition and the implications of this.
It is also predictive of future sales performance – this is hard fact!
The Effective Net Preference score has a proven and robust correlation with both sales and share and this correlation exists at both the individual customer level as well as at total market share level.
But the real value of knowing your ENP, and tracking how it moves in response to changes marketing investment and/or marketing mix, is that it measures the contribution and value of your individual marketing campaigns at driving business performance in both in the short and long-term.
This enables you to set the optimum mix of marketing activities – a mix that you know will deliver both your short term imperatives and your long term needs.